What to Do When You Receive IRS Notice CP87A

Imagine opening your mailbox and finding a CP87A notice from the IRS. It’s natural to feel a wave of concern, but this letter isn’t a penalty or a bill. Instead, it’s a Dependent Verification Request sent when the IRS identifies that someone else has claimed the same dependent or qualifying child listed on your tax return. This notice allows you to review your filing and ensure everything is accurate. Here’s how to handle it effectively.

What Is IRS Notice CP87A?

The IRS sends Notice CP87A when there’s an issue with a claimed dependent or qualifying child on your tax return. Specifically, it means that another taxpayer also claimed the same dependent, triggering a potential discrepancy. This notice doesn’t automatically mean you made a mistake, but it does signal that the IRS is taking a closer look at your return.

For example, in cases of shared custody, it’s common for both parents to claim the same child accidentally. Alternatively, the issue could arise from negligent record-keeping or even identity theft. While the notice itself isn’t a penalty, failing to address it could lead to accuracy-related penalties or, in severe cases, the loss of tax credits like the Earned Income Credit (EIC) or the Child Tax Credit.

Why Did You Receive a Dependent Verification Request?

The IRS wants to ensure that taxpayers accurately follow its rules for claiming dependents, as outlined in IRS Publication 501. A dependent must meet specific criteria related to relationship, residency, and financial support. If two taxpayers claim the same dependent, the IRS steps in to resolve the conflict. Common reasons for receiving a CP87A notice include:

• Shared Custody Situations: Both parents may claim the same dependent or qualifying child in the same tax year.
• Incorrect Filing: A taxpayer might mistakenly claim someone who doesn’t meet the dependent requirements.
• Identity Theft: Sometimes, someone could fraudulently use a dependent’s Social Security number on their tax return.

The notice itself isn’t a demand for immediate action, but if the discrepancy isn’t resolved, the IRS will follow up with a CP79 or similar notice, which may escalate the situation.

How to Respond to IRS Notice CP87A

Handling this notice effectively starts with understanding its purpose and following these steps:

1. Review the Notice and Your Tax Return

Read the CP87A notice carefully to understand what the IRS is questioning. Then, review your tax return to confirm that the dependent or qualifying child you claimed meets the eligibility requirements. IRS Publication 501 is a helpful resource for understanding these rules.

2. Verify the Social Security Number

Double-check that you entered the dependent’s Social Security number (SSN) correctly. A small error, like transposing numbers, can lead to a conflict.

3. Determine If Action Is Necessary

• If you are entitled to claim the dependent, you don’t need to write or send anything to the IRS. Simply keep the notice for your records.
• If you listed someone who doesn’t qualify as your dependent, you must file an amended return using Form 1040-X, Amended U.S. Individual Income Tax Return. The instructions for Form 1040-X will guide you through correcting your return. Once completed, mail the amended return to the IRS service center shown in the instructions.

4: Gather Supporting Documentation (Optional)

While you don’t need to send anything to the IRS if you’re entitled to claim the dependent, it’s wise to organize supporting documents for your records. Examples include birth certificates, custody agreements, school records, and financial documents proving support. These can be helpful if the IRS follows up with additional inquiries.

What Are the Consequences of Ignoring the CP87A Notice?

Failing to address the CP87A notice can have serious consequences. If the IRS determines that your claim is invalid, they may disallow the dependent-related credits you claimed. This can result in additional taxes, interest, and penalties.

Moreover, neglecting to correct your return could lead to penalties for negligent record-keeping or accuracy-related issues. Taking prompt action can save you time, money, and stress.

How to Avoid Receiving a CP87A Notice in the Future

Preventing these types of issues starts with careful tax filing. Here are a few tips to avoid receiving a dependent verification request:

• Understand Dependency Rules: Refer to IRS Publication 501 to ensure your claimed dependent or qualifying child meets all requirements.
• Coordinate with Co-Parents or Relatives: If you share custody, decide in advance who will claim the dependent for the tax year.
• Double-check Your Return: Verify all information, including Social Security numbers and residency details, before filing.
• Protect Your Dependent’s Information: Safeguard Social Security numbers to prevent fraudulent claims.

Frequently Asked Questions About IRS Notice CP87A

1. What should I do if the IRS disallows my dependent?
If the IRS disallows your dependent, they will send a follow-up notice explaining their decision. At that point, you can provide supporting documentation to prove your eligibility or amend your return to correct any errors.

2. What is IRS Publication 501, and why is it important?
IRS Publication 501 provides detailed guidelines for claiming dependents. It outlines relationship, residency, and support requirements, helping you determine if someone qualifies as a dependent.

3. Do I need to respond to the CP87A notice?
No immediate response is required. If you’re entitled to claim the dependent, you don’t need to send anything to the IRS. However, if the dependent doesn’t qualify, you must amend your return.

4. Can I claim the Earned Income Credit or Child Tax Credit for the same dependent?
Yes, as long as the dependent meets the eligibility requirements for both credits. These rules are detailed in IRS Publication 501 and should be followed carefully.

5. What happens if someone else claims my dependent fraudulently?

Contact the IRS immediately if you suspect fraud. You may need to provide documentation to resolve the issue and protect your dependent’s information.

Final Thoughts

The IRS CP87A notice is a reminder to review your tax return and ensure your claimed dependents meet the eligibility rules. Acting quickly and accurately can help you resolve the issue without further complications. If you’re unsure how to proceed or need help amending your return, Tax Samaritan is here to guide you. Call us at 775-305-1040 for a free, no-obligation consultation. Let us take the stress out of dealing with the IRS and help you confidently move forward.